When planning and managing your investments, inflation is an influential economic factor that you must take into consideration, and carefully plan for.
Inflation is the rate at which prices for goods and services is rising. For example, if you invest in a stock that provides a 5% return, but inflation is 6%, you are actually losing buying power.
Over time the price of buying things, from a loaf of bread to a new home, often rise. When these increases become excessive, your purchasing power will decline rapidly. This presents challenges for consumers and investors.
When it comes to protecting your investment portfolio from the adverse affects of inflation, there are a few strategies you can adopt to avoid unnecessary hardship; one of which is investing in shipping containers.
In addition to generating income, shipping containers provide diversification too. The container shipping industry gives investors access to countries that may not be experiencing inflation. Diversifying in assets that work abroad, such as shipping containers in emerging markets, provide protection for your portfolio by operating outside the perils of the domestic economy.
Like other commodities, such as real estate investments, the value of container investments tend to rise when inflation is rising, and therefore provide protection against the decreased value of a currency.
“Inflation is going to be something that may gradually affect your portfolio. Whether that effect is positive or negative depends on the actions you begin to take. You want to be diligent about your investments knowing that change is afoot.” – Craig J. Ferrantino, President of Craig James Financial Services.
Economists agree that inflation is an economic phenomenon that you can expect, with near certainty, will occur at some point in time in your investing career. So, it’s important for you to understand how to invest and plan in such a way that your assets maintain their purchasing power. Consider this … placing money in a saving account will cause a major loss in purchasing power by retirement. Hypothetically, earning 4% in a savings account while inflation grows at 7% makes you feel 4% richer, when in fact you are 3% poorer.